Tariffs. Trade deals. AI transformations. Regulatory changes. Geopolitical tensions. Shifting consumer confidence.
As leaders, we continue to face an unprecedented number of unpredictable, disruptive events that can overturn the old certainties.
The problem is not that these unpredictable events happen; the problem is that when they do, leaders tend to freeze or panic and then falter through the uncertainty that follows.
Leading an organization through uncertainty is hard because we cannot predict the future. As silly as that sounds, in organizations, we surround ourselves with data, charts and endless prompts from our GPT model of choice. This magnitude of information gives the illusion we can predict the future, but most of us cannot – and that matters. The future consists of multiple options, and trying to predict attempts to simplify these into one, which can cause you to overlook unforeseen opportunities. Predications are also usually based on experience. In a turbulent environment, the past is not a good guide to the future, and therefore most predictions will be wrong.
The good news is that leading through uncertainty does not require prediction: the challenge is mastering how to make good decisions even though we cannot make predictions. So, how can you make great decisions, bust out of decision paralysis, and lead your team through uncertainty? Here are four ways.
1. Articulate your beliefs
When leadership teams struggle to make and align on choices, it is often because they have not taken the time to align on beliefs. In strategy, we spent time discussing trends ranging from macro and economic to political and industry. Listing trends is a familiar process, and most strategies have multiple PowerPoint slides detailing them; and these trends matter, as they are related to our strategic choices. The problem with this list is that anyone can do it. Where we can differ – and where a potential advantage lies – is in debating and building an understanding of how these may play out, what we believe, and what that means.
This is one of the biggest differentiators of high-performing companies: they make decisions based on beliefs, not facts. This sounds like an odd claim to make: Don’t we want more data-based decision-making? Yes, data matters, but data is only one input. Historical data and facts are the basis for forming insights about the current state, but relying on existing data alone for decision-making has traps in an uncertain world: we cannot assume past and current trends will continue.
Strategic choices are about making sense of data, how it fits with other data and then using this to inform your beliefs about what is going on now and what will shape the future.
As a team, articulate your beliefs: where do you see macro conditions, regulation, consumer sentiment or industry consolidation going over the next two to five years? Are you aligned on beliefs, or are there ones with severe disagreement? If so, these need to be accelerated for more watching and testing.
2. Distinguish between types of decisions
Most companies distinguish between big and small decisions, but not between types of decisions. Decision-making is a critical area where different methodologies and approaches can allow you to move faster and with more robust processes.
Jeff Bezos used decision distinction at Amazon – what he referred to as Type 1 and Type 2 decisions. Whereas Type 1 decisions are “one-way doors” that once you walk through, you cannot go back to where you were before, most decisions are Type 2 decisions, or “two-way doors.” If you make a suboptimal Type-2 decision, you can walk it back. Each decision type requires a different process. Type 1 decisions should be made more slowly with greater rigor, whereas Type 2 decisions should be made more quickly and trusted to more individuals and smaller groups.
Another distinction, and a strategy power move, is identifying no-regret moves. A no-regret move is one that, even if you got your belief wrong, you would not regret making it. As you discuss your decisions with your team, pause at regular intervals to ask if they have identified any “no-regret moves.” Massive layoffs are not a no-regret move, but cutting an under-performing product that has never validated assumptions may be. Ask at each decision point if this is a no-regret move and quickly execute all that are.
3. Look for kickers and killers
When making strategic decisions, we tend to default to one question: What could happen? This traps us into prediction mode, but more critically, it frames us to consider only the downside. Predicting problems involves forming an infinite set of things that may or may not occur and may or may not be relevant. So, as a team, stop asking “What could happen?” Instead, there are two critical questions: “What could break us?” (a killer) and “What could make us?” (a kicker).
Visualize the varying strategic consequences from your decisions as a bell curve. With clear strategic choices and disciplined execution, most outcomes will fall under the fat middle with familiar consequences and medium to high likelihoods. Killers and kickers lie at the edges of the bell curve of probabilities.
First, to identify the positive outliers that could give you a “kicker,” ask:
How could we win big?
What could make us?’
Then, think through vulnerabilities (killers), and once you identify them, ask:
What would have to be true for this vulnerability to be exposed? And,
What do we have to do to make ourselves more robust?
Most leadership teams spend disproportionately less time identifying possible upside kickers versus downside risks. Explore the upside potentials with the same attention, if not more, than you protect from the downside.
4. Codify what a “good” decision looks like
If you asked the leaders in your company, “What makes a good decision at our organization?” would they all answer in the same way? Reinforcing what makes a good decision at your organization is one of the most potent ways to boost strategic agility. It would be easy to say that a good decision gives a good result, but that is not very helpful when you are making it, and it is not always true. We can take a bad decision and get lucky. High-performing companies codify the features of a good decision, which then empowers team members around the globe to make them more quickly and confidently.
Your codified good decisions should fit your context and culture, but some standard variables to consider include:
Whether it is in line with the company’s beliefs
Use of data (do you need to use it, how much and from what sources)
Time taken to make it (hours, days, weeks)
Who needs to be involved
Whether it is clear about the most critical assumptions
A good decision tends to open up rather than close down future options, meaning it continues to open the opportunity set going forward (possible kickers) rather than prematurely force an organization on one path. Take different approaches for decisions that are “no-regret moves,” which can be made quicker than those around your identified game changer assumptions. What makes a good decision will vary by company, and that is ok. What is not ok is not being clear.
Face uncertainty with aligned speed
Facing the unknown can lead a team to decision-making paralysis – a constant holding pattern of asking the team to wait until you know more before making strategic decisions. But the next milestone will just present more new information, which will tempt you into waiting once more. The challenge in today’s interconnected, fast-moving and ever-changing world is that speed matters.
The opportunity is to create robustness in your decision-making approach so your team can move with aligned speed. Decision-making speed done without alignment is chaos. Decision-making alignment without speed is too slow to matter. Adopting these decision-making practices requires the humility to forsake prediction and the courage to face reality. When doing so, you can lead your teams more confidently into the future by making better, faster decisions for growth and performance.
Opinions expressed by SmartBrief contributors are their own.
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